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The Wrongologist

Geopolitics, Power and Political Economy

Monday Wake-Up Call – October 20, 2014

Happy Monday! Here is your thought for the week:

“People react to fear, not love. They don’t teach that in Sunday school, but it’s true” − Richard M. Nixon

Not a complete surprise that Nixon was wrong. They DO teach fear in Sunday school:

COW Fear

 

 

 

 

 

 

 

 

 

 

 

 

 

In Liberia, only 43% of the adult population are literate, so radio, not the written word, is the best way to inform people about the disease. There are 16 local languages in Liberia, in addition to English. People rarely have access to the Internet or television.

Songs about Ebola are popular in West Africa. One of the most popular is “Ebola in Town” by Samuel “Shadow” Morgan and Edwin “D-12” Tweh, along with Kuzzy, of 2Kings. The song sounds like American hip-hop, but the style is called “Hip Co”, a form of colloquial English that appeals to young Liberians (about 50% of the population is under 18).

Here is an audio file of the song. There are YouTube videos out there, but they have extremely graphic depictions of Ebola victims, and may not be suitable for viewing at work or at home, if kids are in the room:

A sample of the lyrics:
Something happen
Something in town

Oh yeah the news

I said something in town
Ebola
Ebola in town

[Snip]

If you like the monkey

Don’t eat the meat
If you like the baboon
I said don’t eat the meat
If you like the bat-o
Don’t eat the meat
Ebola in town.

Songs can’t do all that much in a nation with the second-fewest doctors per person in the world.

Here are today’s hot links for your breakfast buffet:

Ebola got you stressed? Try textual healing. A new breed of online-therapy services offers flat-rate plans that allow you to text-chat with a licensed, accredited therapist as much as you like (need).

At least 30 states are still providing less funding per student for the 2014-15 school year than they did before the recession hit.

Researchers have created what they call Alzheimer’s in a Dish — a petri dish with human brain cells that develop the telltale structures of Alzheimer’s disease.

And we were doing so well in Pakistan: Six senior members of the Pakistani Taliban vowed allegiance to the Islamic State.

Go ahead, take your time getting to the party: Study shows that the median arrival time of 803 guests was 58 minutes after the party’s start time.

Of course we love our allies: Saudis to behead, then crucify a cleric who spoke out against the King. Did you know that Saudi Arabia doesn’t have a constitution?

We will never learn: John Allen, the general in charge of the US-led coalition’s response to ISIS says the US will create “a home-grown, moderate counterweight to the Islamic State”. Didn’t work in Vietnam, Afghanistan, or Iraq. Why would it work this time?

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Oil: Our Latest Middle East Bombing Run?

Oil has now become another front in the competition between America’s friends and enemies in the Middle East. On October 1st Saudi Arabia, the OPEC cartel’s dominant producer, pumping around a third of OPEC’s oil, or about 9.7 million barrels a day, unilaterally cut its official prices. The Economist reports on the surprising price of oil:

Since June the price of a barrel of Brent crude oil—the global benchmark—has slumped from $115 to $92, a decline of 20%, and the lowest for more than two years.

Here is the Economist’s  graph of Brent crude prices:

Brent Crude Price

They report that the drop is partly due to economic weakness. Growth is slowing, particularly in China and the Euro zone, bringing with it a reduction of oil consumption. The WaPo reports that prices have fallen in the US as well: (brackets by the Wrongologist)

Crude oil prices are…down to the lowest level in 17 months in the US. Gasoline prices have [also] been sliding.

Reuters reports that Saudi Arabia told the oil market it would be comfortable with prices as low as $80/barrel for a period of up to two years. Reuters says the following about the Saudi strategy: (emphasis by the Wrongologist)

The Saudis appear to be betting lower prices – which could strain the finances of some members of OPEC – will be necessary to pave the way for higher revenue in the medium term, by curbing new investment and further increases in supply from places like the US shale patch

This drop in prices will give a short-term boost to the US economy and US consumers, who will view cheaper gas prices like an increase in take-home pay. But it could put a dent in revenues in countries such as Russia, and Iran, where oil exports play an enormously important role in supporting economic growth and government finances. Russia’s Finance Minister has already announced that lower oil revenues could force the curtailment of its military spending:

Between 2004 and 2014, Russia doubled its military spending and according to the newly adopted budget, it will further increase it from 17.6 percent of all budget spending this year to 20.8 percent, or 3.36 trillion rubles ($84.19 billion), in 2017.

But the new Russian budget, which envisages a deficit of 0.6% of GDP over the next three years, is based on oil prices of $100+ per barrel, not the high-$80’s seen this week. On Monday, President Putin signed a law that would allow the government to tap one of the country’s oil windfall revenue funds, the Reserve Fund, for the first time since the aftermath of the 2007-8 global financial crisis. The Fund contains $90 billion. While it is doubtful that this will change Russia’s stance on Ukraine, it might influence Russia’s position on Syria.

The Wall Street Journal reports that Iran has a higher per barrel break-even price than other Middle East oil producers. Here is the oil per barrel price required to balance each country’s budget:

OPEC Breakeven prices

 

Iran, faced with lower oil revenues and the highest break-even price, could be forced to limit its nuclear program, or even its support for Iraq’s battle against ISIS.

But before we have a party and celebrate, lower prices also affect oil production in the US. The Economist quotes David Vaucher, an analyst at IHS, who says that to achieve a realistic internal rate of return on investment of 10%, a typical new shale-oil project in America requires an oil price of $57 a barrel, but some still require between $75 and $110.

The Obama administration held detailed discussions in September with the Kingdom of Saudi Arabia. While it was clear that one outcome was an agreement by the Saudis to participate in air attacks on ISIS, it is clearly possible that the plan to use oil prices as a tool in the fight was also on the table. It wouldn’t be the first time that oil price (or availability) has been used as a weapon. Oil was first used as a weapon by the US to stop Israel, Britain, and France from retaking the Suez Canal in 1956.

And as Michael Klare says at Oilprice.com, the “oil weapon” was used in 1973 against the US. We hated OPEC’s war on our economy back then. Skip ahead four decades, and it’s smart, it’s effective, and it’s the American way. We of course, used that very same old oil weapon when we embargoed oil sales by Saddam Hussein’s Iraq.

Oil is again the centerpiece of our Middle East strategy.

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We Have No Syrian Strategy

The Senate Armed Services Committee held a hearing on Tuesday about the US policy to combat the Islamic State. It featured testimony from Secretary of Defense Chuck Hagel and Gen. Martin Dempsey. You can find transcripts of their testimony here. During their pitch, they called each other “Chuck” and “Marty”. What happened to “Mr. Secretary” and “General”?

Is this the level of professionalism these guys show in the field, or with our allies?

Anyway, the idea of the hearing was for Secretary Hagel and General Dempsey to explain to the Senators how we will conduct the “degradation and destruction” of ISIS. It didn’t go well for those of us who think we should really have a strategy before we head off to Iraq and Syria.

The headline from the hearing is that the disconnect in the ISIS strategy, that we saw when Mr. Obama said we had no Syrian strategy, remains. We still have no Syrian strategy, at least no strategy that has a high probability of working.

Aside from the air strikes that you know about, there was a discussion of training a new force to go into Syria. General Dempsey expects that we will recruit 5,400 previously untrained Syrians from refugee camps, send them to about a year’s military training in Saudi Arabia, organize maybe a few more contingents in later training cohorts, and then send them into Syria, where they will defeat ISIS, and then move against Assad.

That’s believable. Hope you didn’t think we should be doing something sooner, because no other ME country will be sending actually breathing, trained troops to help out against ISIS in Iraq or Syria.

The Obama strategy reads as a multi-track effort. On the one hand, we will combat ISIS; then we will effect regime change in Syria. That’s a maximalist strategy, but is it realistic? The plan has additional risks, (American boots on the ground, quagmire, and creation of additional Islamists who hate America) plus, there is little chance it will work. Too many moving parts.

Maybe Mr. Obama’s real plan for training 5400 Syrians to become a new kind of “Bay of Pigs Brigade” (that didn’t go well) is to delay having to do anything about Syria and Assad, and leave that decision to his successor. The peril is, should the Bay of Pigs Brigade fail, McCain & Co then have a better reason to call for an all-out invasion of Syria, because Assad just killed off our 5400 trusty unicorns.

And because America would lose face if we let Assad get away with it.

Today in the NYT, Tom Friedman finally makes some sense:

Here’s another question: What’s this war really about?
“This is a war over the soul of Islam — that is what differentiates this moment from all others,” argues Ahmad Khalidi, a Palestinian scholar associated with St. Antony’s College, Oxford. Here is why: For decades, Saudi Arabia has been the top funder of the mosques and schools throughout the Muslim world that promote the most puritanical version of Islam, known as Salafism, which is hostile to modernity, women and religious pluralism, or even Islamic pluralism.

More from Friedman:

Saudi financing for these groups is a byproduct of the ruling bargain there between the al-Saud family and its Salafist religious establishment, known as the Wahhabis. The al-Sauds get to rule and live how they like behind walls, and the Wahhabis get to propagate Salafist Islam both inside Saudi Arabia and across the Muslim world, using Saudi oil wealth. Saudi Arabia is, in effect, helping to fund both the war against ISIS and the Islamist ideology that creates ISIS members.

In yesterday’s NYT, the above quoted Ahmad Samih Khalidi said:

The West must overcome its reluctance to offend the Saudis, and speak out much more forcefully against the insidious influence of Wahhabism and the ideological support it offers violent extremism. The Arab Gulf States must choose a side. They cannot continue to finance terrorism and use fundamentalism as a policy tool and yet claim to be fighting it abroad.

The lesson we should have learned in Iraq is that toppling a ruthless dictator does not produce spontaneous democracy. It produces spontaneous chaos that makes the ruthless dictator look, in retrospect, like the better alternative. That could be the outcome in Syria as well.

When ideology collides with reality, reality wins. Today’s reality is that if the ME nations fail to address this problem themselves, it will not get solved. It’s time for America to rethink the continuation of the wishful policies that have kept us stuck in the Middle East for so long, and at such a high cost.

As Matt Stoller said this week: (emphasis by the Wrongologist)

Adopting a realistic policy on ISIS means a mass understanding who our allies actually are and what they want, as well as their leverage points against us and our leverage points on them. I believe Americans are ready for an adult conversation about our role in the world and the nature of the fraying American order, rather than more absurd and hollow bromides about American exceptionalism.

 

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